If the cash rate is increased, the RBA is trying to:
A)address excessive inflation in the economy
B)reduce the demand for money in the economy
C)discourage credit-based spending
D)all of the above

Question

Quizplus · Accepted Answer

When the cash rate is increased, it becomes more expensive for banks to borrow money from the Reserve Bank of Australia. As a result, the banks will increase their interest rates on loans and mortgages, which will reduce the amount of money that people can borrow and spend. This can help to address excessive inflation in the economy by reducing the demand for money and discouraging credit-based spending. Therefore, all of the above choices are correct.

If the Cash Rate Is Increased, the RBA Is Trying